natural gas liquid presentation

8/6/2019 Natural Gas Liquid Presentation

1/30

Natural Gas as aChemical Industry Fueland Feedstock:Past, Present, Future

(and Far Future)Jeffrey J. Siirola

Eastman Chemical CompanyKingsport, TN 37662


2/30

Fuel and FeedstockNatural gas is the fuel that powers most (but not quite all)US chemical and refining processes

Natural gas methane is the feedstock for hydrogenproduction (for hydrocracking, hydrodesulfurization, andammonia) and for syngas (for methanol, and its

derivatives e.g. MTBE, formaldehyde, and acetic acid)

Natural gas condensate (ethane and propane) is an

advantaged raw material via ethylene and propylene tomuch of the organic chemicals industry (compared tocrude-oil-derived naphtha)


3/30

Feedstock Pricing ConsiderationsCrude Oil Global supply and demand Established oceanic transportation network

Productive capacity and risk premium Impact of speculation

Natural Gas Local supply and demand Transportation limitations Limited US conventional supply New shale gas production technology

Coal Excess productive capacity Inexpensive extraction technologies Environmental impact issues


4/30

US Crude Oil Price


5/30

US Natural Gas Price


6/30

US Natural Gas Consumption


7/30

Recent Past(Last Decade)


8/30

US Electricity Production by Fuel


9/30

Power Plant Natural Gas Consumption


10/30

US Fossil Fuel Price


11/30

Industrial Natural Gas Consumption


12/30

Impacts of Increasing Natural GasPricesChemicals from methane Methanol production moves offshore to sources of stranded gas MTBE abandoned as gasoline oxygenate Ammonia moves to Canada

Hydrogen becomes expensive (and low-sulfur diesel at the pumpbecomes more expensive than regular gasoline)

Chemicals from condensate and naphtha

Condensate price rises with natural gas (for awhile) Ethylene price spikes Propylene price finally rises higher than ethylene


13/30

Eastman ResponseShut down older cracker capacityAbandon some ethylene derivatives (polyethylene) and

seek C 1 routes to others (ethylene glycol, acetaldehyde)as previously done for acetic acid/anhydride)Abandon polypropylene

Seek C 1 routes to propylene (MTP) for existing oxoderivatives and other intermediates currently made frompropylene (acrylics, methacrylics, acetone, etc)Developed process for the large-scale gasification ofpetcoke, lignite, or coal as source of syngas for C 1chemistries and refinery hydrogen


14/30

Other ResponsesFlight to off-shore production (to sources of strandedmethane and condensate Persian Gulf)

Bio-based feedstocks (ethylene from sugar-basedbioethanol dehydration - Brazil)Feedstocks from coal gasification and liquefaction(China)Calls for increased US LNG infrastructureDevelopment of directional and horizontal drilling andhydraulic fracturing technologies (Shale Gas)


15/30

Feedstock Substitution ChallengesCapital

Extra steps required to employ alternate feedstocks are

often very capital-intensive Solids (coal and biomass) handling Low bulk density solids transportation Pyrolysis

Gasification Air separation Fischer-Tropsch reaction Direct liquefaction

Capital costs follow average energy prices (after a lag)


16/30

Feedstock Substitution ChallengesEnergy

As methane, condensate, and light crude become depleted, feedstocksfor both transportation fuels and chemicals will become heavier andhigher oxidation stateHydrogen will be required to reduce these feedstocks

If derived as at present from steam reforming, will result in significantadditional carbon dioxide production

Unless derived from solar or nuclear water-splittingProcesses will become net endothermicReaction energy and separation/purification energy both to be suppliedfrom utilities

Process industries become much more energy-intensiveGreater role for heat integration, multi-effect operation, low-energyseparations, process intensification technologies, etc.


17/30

Present(Last Few Years)


18/30

Crude Oil and Natural Gas Prices


19/30

Ratio of Crude Oil Price ($/bbl) toNatural Gas Price ($/MBTU)


20/30

Shale GasUnconventional natural gas (as is coalbed methane, tightsandstone gas, and methane hydrates)

Found in relatively thin shale formations of very lowpermeabilityEconomic production enabled by two technological

innovations: Directional drilling Hydraulic fracturing

Technology and field development encouraged by highnatural gas prices


21/30

Geology of Natural Gas Resources


22/30

US Shale Gas Plays


23/30

Shale Gas ImpactShale gas now reclassified as conventional gasUS conventional gas reserves doubled

Price of natural gas halved

Accelerate electric power fuel switching from coal to

natural gasKilled proposed Eastman gasification projectRestored US production of methanol and ammonia

Condensate crackers restartedRestored advantaged US feedstock position for manyorganic chemicals


24/30

Near Future


25/30

What is Likely to HappenNatural gas replacement for coal as the primary earlycarbon management technique (source reduction)

Increased deployment of highly efficient Natural GasCombined Cycle plants for electricity production andchemical plant cogeneration

Increased US production and export of chemicalsdecreasing the trade deficitFor many intermediates, interesting competition betweenC1 (methane) and C 2 (ethane) feedstocks resulting fromadvances in catalysis, energy efficiency, and processdesign optimization


26/30

For How Long?Depends on how long shale gas remains plentiful andwhether it is wet or dry

If plentiful and wet, then the existing US ethane-basedchemical industry infrastructure will remain world-

competitiveIf plentiful but dry, new C 1 chemistries will emerge, butbased on methane steam reforming syngasIf oil shale is developed using directional drilling andhydraulic fracturing gas shale technology, the role fornaphtha cracking infrastructure may be extended


27/30

Far Future


28/30

What could go Wrong?Electricity power plant fuel switching could dominate therate of shale gas development

Amount of gas producible from shale formations might beless than predictedAdditional shale formations might be more expensive to

produce than first experiences suggestSome shale formations might be geologicallyinappropriate for development (e.g. shallow formationsnear groundwater supplies)Production technologies (especially hydraulic fracturing)might have unintended environmental consequencesleading to political or regulatory restrictions


29/30

Then What?If a great deal of infrastructure is put in place to displacecoal by natural gas for electricity production and for

institutional and industrial boilers and to otherwiseexpand the use of methane for chemical production,But natural gas becomes less economically advantagedcompared to coal

Then coal gasification may once again return,But if so, most likely only to make Synthetic Natural Gas(SNG)!

With the corresponding carbon dioxide captured and sequestered


30/30

Thank You

natural gas liquid presentation

Documents